Two eBay sellers enter guilty pleas

Kenneth Walton and Scott Beach, two of the defendants in a case involving the sale of a fake Richard Diebenkorn painting last year, plead guilty to defrauding bidders as part of a plea agreement.

July 12, 20021:11 AM PDT

Two of the defendants in a case involving the sale of a fake Richard Diebenkorn painting on eBay pleaded guilty on Tuesday to defrauding bidders.

The pleas by Kenneth Walton, a Sacramento, Calif., lawyer, and Scott Beach, of Lakewood, Colo., were part of separate agreements with federal prosecutors. Both defendants agreed to pay restitution to bidders and to cooperate with the government. The two also agreed to not participate in any online auctions until they have been released from court supervision.

Because of his plea earlier Tuesday, Walton will be disbarred from the State Bar of California and agreed not to challenge that decision.

In turn, the government agreed to ask for a lenient sentence for Beach and Walton. Walton was "very satisfied" with the plea agreement, his lawyer, Harold Rosenthal, said.

"We see this as a substantial step toward a just resolution of this matter and toward his avoiding incarceration," Rosenthal said.

Earlier this year, federal prosecutors indicted Walton and two other defendants, charging them with making fraudulent bids on hundreds of art auctions on eBay, including the infamous fake Diebenkorn work. According to the indictment, the three defendants, using a variety of eBay user IDs, placed bids on more than half of the 1,100 auctions they listed on eBay between 1998 and May 2000. Prohibited by eBay, the practice is known as "shill bidding," and it is typically done to drive up the price of auctions or to convince potential bidders of the legitimacy of a questionable item.

"We believe this sends a very clear message that shill bidding has a
very serious cost associated with it: You will be caught and
prosecuted," Pursglove said.

The fake Diebenkorn caused a stir when it was listed on eBay last year. The painting purportedly was bought in Berkeley, Calif., near where Diebenkorn had lived and worked in the 1950s. Although the listing did not state that the painting was by Diebenkorn, the auction tantalized potential bidders because it was signed "RD 52."

As part of the agreement, Walton pleaded guilty in U.S. District Court in Sacramento, Calif., to two counts of wire fraud and four counts of mail fraud. Scott Beach pleaded guilty to one count of wire fraud and three counts of mail fraud in the case. Walton agreed to pay more than $60,000 in restitution, while Beach agreed to pay more than $39,000 in restitution.

They faced up to five years in prison and a $250,000 fine for each count that they were charged with. A sentencing hearing is scheduled for June.

A third defendant, Kenneth Fetterman of Placerville, Calif., is still at large, said Patty Pontello, a spokeswoman for the U.S. Attorney's Office.

Assistant U.S. Attorney Christopher Sonderby also said he feels the guilty pleas "send a message."

"Shill bidding on Internet auctions is not a game; it's a felony," Sonderby said.